artemis, what its worth !!, page-8

Ya I always enjoy your posts and your drilling notes. However - as with KAR where I was pleased for you when you finally jumped on post drilling - I would contest your initial valuation:

It is erroneous to value MEO based on its current 70% share in Artemis since it cannot possibly fund the drilling of the well alone - it has targeted farming down to 20% to avoid paying for the first drill. (I still am uncertain whether it will achieve its objective of a free well for 50% plus its funding of follow ups unless the 3D seismics are simply stunning - KAR gave away 51% of 3 wells in exchange for 80% of the cost of drilling with another 9% for 80% of the next 125m followup)
Applying this 20% figure gives GIIP potential recoverable resource of 1.33Tcf:
At a bullish 30% success rate this gives a figure of sub 60c share as a success target.

Interestingly, applying the same metric to its sister co CUE (with a 15% free carry) would have an adjusted 'valuation' of 30c. So bullish investors could claim both still have significant upside.


I have 2 questions regarding Artemis:

1. Will the 50% farm down for 100% of drilling costs on a 1 off well actually be achieved? To what extent will equity interests from other unfunded parties limit hinder it?
2. Is the 20% plus implied success rate in the current MEO/CUE SPs, or the 30% target mentioned above, realistic? I find it interesting to note that pre Poseidon, KAR had an implied success rate of under 15% across its browse campaign - which with three targets with somewhat uncorrelated risk was inherently less risky than a one shot wonder.